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Editor’s Note: This article has been updated with current 2026 estate tax exemption figures.

Here in Savannah, we often see clients concerned about preserving their wealth for future generations. One question we frequently hear at Smith Barid, LLC is, “Can I give gifts to avoid the estate tax?” The answer isn’t a simple yes or no. Let’s unpack this complex topic and explore how gift-giving can be a part of your estate planning strategy.

Understanding the Basics

First, some good news for many Georgia residents: you might not need to worry about estate taxes at all. Georgia doesn’t have a state estate tax, and the federal estate tax only applies to estates worth more than $13.99 million per individual (as of 2026). For married couples, that threshold doubles to $27.98 million.

But if your estate is larger than that, or if you’re concerned about future changes to the tax law, gift-giving can indeed be a strategy to reduce your taxable estate.

Annual Gift Tax Exclusion

The IRS allows you to give up to $17,000 per person per year (in 2023) without incurring any gift tax. This is called the annual exclusion. For married couples, this amount doubles to $34,000 per recipient. So, if you have three children and six grandchildren, you and your spouse could give away up to $306,000 per year without any tax consequences.

Lifetime Gift Tax Exemption

But what if you want to give more? This is where the lifetime gift tax exemption comes in. As of 2026, this amount is $13.99 million per individual, the same as the estate tax exemption. You can use this exemption to make gifts above and beyond the annual exclusion amounts.

Here’s the catch: the lifetime gift tax exemption and the estate tax exemption are linked. Every dollar of your lifetime exemption that you use reduces your estate tax exemption by the same amount.

Strategic Gift-Giving

Given these rules, how can gift-giving help reduce estate taxes? Here are a few strategies:

  1. Annual Gifts: Making regular annual gifts up to the exclusion amount can significantly reduce your taxable estate over time.
  2. Education and Medical Expenses: Payments made directly to educational institutions for tuition or to medical providers don’t count towards the gift tax. This can be a great way to help family members while reducing your estate.
  3. Appreciating Assets: Gifting assets that are likely to appreciate in value can be especially effective. Not only do you remove the current value from your estate, but also all future appreciation.
  4. Charitable Giving: Gifts to qualified charities can reduce your taxable estate and may provide income tax benefits as well.

Potential Pitfalls

While gift-giving can be an effective strategy, it’s not without risks:

  1. Loss of Control: Once you give a gift, you no longer have control over that asset.
  2. Medicaid Considerations: Large gifts can affect Medicaid eligibility if you need long-term care within five years of making the gift.
  3. Tax Basis: Gifted assets retain your tax basis, which could result in higher capital gains taxes if the recipient sells the asset.
  4. Future Law Changes: Tax laws can change, potentially affecting the effectiveness of your gift-giving strategy.

The Savannah Perspective

Here in Savannah, we see many families with unique assets that require careful consideration in gift-giving strategies. Whether it’s a historic home in the downtown area, a family business, or coastal property, it’s crucial to consider not just the tax implications, but also the long-term family and legacy implications of gifting these assets.

At Smith Barid, LLC, we understand the complexities of estate planning and gift-giving strategies. We work with our clients to create comprehensive plans that balance tax considerations with family goals and values.

Interested in exploring whether a gift-giving strategy could be right for your estate plan? Give us a call at 912-352-3999 or click here to schedule an initial discovery meeting. Let’s work together to create a plan that preserves your wealth and secures your legacy for generations to come.

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